Nina Olson is the former National Taxpayer Advocate, where she represented the voice of the taxpayer within the IRS and before Congress for 18 years. As part of her job, she oversaw the Office of the Taxpayer Advocate Service, which has staff and offices around the nation. While her role was within the IRS, it was independent of the agency and she was often considered one of its most vocal critics. She retired in July and recently launched a nonprofit, the Center for Taxpayer Rights.
She began her career as a tax preparer, later becoming an attorney who defended taxpayers dealing with the IRS. She also opened the first independent low-income taxpayer clinic in the United States. She spoke with the Associated Press about her career, the IRS, taxpayer rights and her new endeavor. All answers edited for clarity and length.
Q. Taxpayer rights is your life’s work, what drew you to it?
A. First I was an artist, I was a painter and I needed to do something to make money. My friends who were artists had no one to help them prepare their taxes so I started to help them. Then what I saw was the imbalance of power as people who made a mistake and wanted to fix it but were afraid of the IRS. That led to me becoming an attorney focusing on taxpayers with controversies with the IRS and that led to me to wanting to do pro bono work for taxpayers. There was no vehicle to do that, so I started the Community Tax Law Project.
The more I worked in that field, the more I observed how tax administration works — not just in US but around the world. (Low-income taxpayers are underrepresented in these systems) and that leads to incorrect results for those taxpayers and decisions against them. In the U.S., that comes about because they didn’t have anyone to come and lobby for them on the Hill, write notes on legislation and the court cases decided were for people who could afford representation. That didn’t promote fairness in the system. It made it very clear to me that taxpayer rights had to be at the forefront of whatever I was doing.
Q. As Taxpayer Advocate, you were in a unique position of both being within the IRS but also being a forceful critic, was that difficult to manage?
A. It’s very difficult. There’s not a day that goes by where there wasn’t some kind of tension and you’re speaking up in a room where people don’t want you to speak up.
The IRS, their work has been increasing, its staffing has been decreasing and the training has been decreasing. That combination of things means people are under pressure to produce and not taking time to stop and consider how (those actions) may affect all taxpayers.
That was my job — and that was the job of the employees of the Taxpayer Advocate Service — was to speak up. That’s what advocate means; and it means speaking up whether people wanted to hear from you or not. That creates tension, but I have pretty thick skin.
Q. Tell me about your new nonprofit.
A. The Center for Taxpayer Rights is just what it says, I’m not into fancy names. I really see it as a hub of activity for taxpayer rights; but the activity is in partnership with other entities, other governments — it could be anything. Its goal is to advance taxpayer rights here and around the world.
This year we will be holding the fifth annual international conference on taxpayer rights in South Africa looking at issues for developing countries. How do we look at taxpayer rights as human rights: What does that look like in developing countries? How do you raise money for public services and how do you do that fairly and legitimately?
There are a lot of reasons people don’t pay the taxes that are owed. The United States is very law abiding. Our law is obscenely complicated so it’s very easy to make a mistake. And complexity breeds also opportunity to not comply.
Q. The IRS is in a position to reorganize soon, what would it take for it to succeed?
A. I think it’s easy to focus on lack of resources. But I think the IRS wastes a lot of its money on rework and doesn’t use its money well to decide who to go after. For example, almost a quarter of the audits that are done — the face-to-face audits on individual and small businesses — result in no change whatever. If we are sending the most expensive employees out and nothing results from it, either the IRS has missed something, or the IRS selected the wrong case and wasted time and resources and put burden on taxpayer because they didn’t select the right case.
Q. It’s tax filing season right now, if you could tell taxpayers one thing, what would it be?
A. I think there are just a couple of common-sense rules: If someone tells you something that sound too good to be true, it probably is. Because the law is so complex, people rely a lot on their preparers and there are unscrupulous preparers out there. Be careful about who you are using. If you are using software be careful how you are entering info. If a taxpayer is using software, the law says they are responsible for errors.
And if you get a notice from IRS don’t ignore it. The IRS is a big machine and a lot of this automatic. If you don’t respond, they will assume you are ignoring them and next thing you know your paycheck is being withdrawn. If you can’t get through or no one is listening to you, go to the Taxpayer Advocate. There is an office in every state. You will get a real live human and you will get one person who is assigned to you. It’s one of the rare instances in government where you will have one person assigned to you and they will pick up when you call.
Q. They have not filled your role yet with a permanent replacement, any thoughts on why?
A. I am baffled. Again, I made my announcement on March 1 that I was going to retire on July 31 — that is 5 months. At the time I walked out the door, there was a list of five very good candidates, and I have no idea why my replacement has not been appointed. It’s simply appointed by the Treasury. As far as appointments go, this is an easy one and it could get done tomorrow and it needs to be done tomorrow.